On 6 July 2016 the Court of Appeal handed down judgment in Cartier International AG and others v British Sky Broadcasting Limited and others, ([2016] EWCA Civ 658) dismissing an appeal against an order requiring internet service providers (“ISPs”) to block websites offering counterfeit goods.

Cartier and the other Claimants sought an injunction against the five main ISPs in the UK, requiring them to block access to certain websites that were being used by their operators to infringe their trade mark rights by marketing counterfeit goods under those marks.

As previously reported on The Injunctions Blog and on Inforrm the High Court held that it had jurisdiction to grant website-blocking injunctions against ISPs in cases involving trade mark infringement. It also held that it was proportionate to make such an order in the circumstances, as the relief was justified and would strike a fair balance between Cartier’s trade mark rights, the ISPs’ right to freedom to carry on business, and internet users’ rights to freedom to receive information. The ISPs were also required to bear the cost of implementing the blocking orders.

On appeal, the ISPs contested the court’s jurisdiction to grant blocking orders in cases involving trade mark infringement. They argued that, whereas the United Kingdom had implemented the relevant provision of EU law (Article 8(3) of the Information Society Directive) which enabled courts to grant such orders in relation to cases involving copyright, it had not passed any domestic legislation to implement Article 11 of the Enforcement Directive which extended that power to other IP rights (including trade marks).

Moreover, they submitted that the courts’ general discretion under section 37(1) of the Senior Courts Act 1981 to grant injunctive relief “in all cases in which it appears to be just and convenient to do so” did not confer a new power to grant an injunction where none existed before, and that it was not generally possible to obtain injunctive relief against a party who was not itself guilty of any wrongdoing.

Kitchin LJ, giving the leading judgment, expressly recognised that the ISPs had not themselves infringed the claimants’ trade marks. Nevertheless, he held that the court had a very wide jurisdiction to grant an injunction and that Article 11 provided a principled basis for extending the court’s general power under section 37(1) to grant injunctions, to encompass website blocking orders against ISPs whose services were used by a third party to infringe trade marks. The court saw no difficulty in construing section 37(1) – which is worded very broadly – in this manner, and recognised that it was duty-bound to do so by the Marleasing principle (which requires national courts to interpret domestic legislation consistently with EU law as far as possible).

Kitchin LJ refused to draw any distinction between websites disseminating copyright-infringing material and those advertising counterfeit goods. He held that, in both cases, the ISP was an “essential actor” enabling its customers to access offending material on the internet, whether or not they actually exercised any control over the services of which those customers made use. There was no requirement for the ISPs to have any specific relationship with the website operators. The court noted that Article 11 was clearly intended to ensure that holders of IP rights other than copyright should be entitled to seek an injunction against ISPs where such rights were being infringed.

The ISPs had also argued that the orders made were disproportionate, having regard to the evidence before the court. Rejecting this argument, Kitchin LJ cited provisions of the Enforcement Directive and CJEU case law to make the following findings:

It was not necessary for the blocking order to lead to a complete cessation of the infringing activity, provided that it at least had the effect of making access to the target website difficult to achieve, and of seriously discouraging internet users from accessing it.

The costs of implementing a blocking order could be borne by the ISP, provided the measures they had to take were not unnecessarily costly or difficult. In this case, the majority view of the court was that costs of implementation were relatively small and could be regarded as an incidental cost of running an ISP business. However, the Court of Appeal recognised that cost proportionality was a factor which had to be kept under review in future applications.

It was economically more efficient to require ISPs to take action to prevent infringements occurring using their services than to require rights holders to take action directly against infringers. This finding was consistent with the EU legislative policy underlying Article 8(3) and Article 11 which recognised that ISPs would often be best placed to stop infringing activities.

Alternative measures, particularly “notice and take-down” strategies, were unlikely to achieve anything more than short-term disruption of the target websites and accordingly did not provide an equally effective remedy for rights holders.

On the issue of costs of the proceedings, Kitchin LJ refused to depart from the general rule that an unsuccessful party (in this case the ISPs) should be ordered to pay the costs of the successful party. He held that applications for blocking orders against ISPs should not be treated like Norwich Pharmacal applications where the applicant was typically required to pay the respondent’s costs (because, in those circumstances, the applicant could seek to recover those costs in subsequent proceedings against the wrongdoer which in the case of website operators were unlikely to be brought).

On the issue of costs of implementation of the blocking order, Kitchin LJ also upheld the first instance judge that these should be met by the ISPs. On this one issue alone, Briggs LJ gave a short dissenting judgment saying that the costs should be met by the claimants.

Conclusion

When the first instance decision was handed down it was greeted as a radical codifying of the new ability of the courts to grant injunctive relief not only against legal wrongdoers as such, but more generally where it was appropriate to do so. The Court of Appeal has now authoritatively fully endorsed this approach. Since the first instance decision, we have seen the High Court fashion new forms of injunction, most recently in the form of the notification order in Holyoake and another v Candy and others. Given the endorsement from the Court of Appeal, it seems likely that that far reaching approach is likely to continue.

This ruling also serves as a poignant and very timely reminder of the impact of EU legislation and CJEU jurisprudence on the interpretation and application of domestic law. Underlying principles of the Information Society Directive and Enforcement Directive weighed heavily in the court’s reasoning, and played a material role in the fundamental question of the court’s jurisdiction to grant the orders sought, reflecting a widely seen judicial imperative to bring domestic law in line with European law by all means reasonably possible.

The Court of Appeal also had regard to the wider EU legislative scheme which conferred various immunities and protections on ISPs and therefore justified imposing certain burdens on them in return. It remains to be seen whether – and to what extent – these principles will continue to be upheld by English courts in the new political reality and if EU law ceases to have effect in the UK as a result of Britain’s exit from the European Union.